Dave Ramsey says if you can't afford a 15-year mortgage, you can't afford the house. A real estate expert disagrees: 'Avoiding debt at all costs is not always a sound financial decision for everyone'

• Recent mortgage rate hikes have made buying a home even less affordable.
• As costs rise, Dave Ramsey says if you can't afford the payment on a 15-year mortgage, you can't afford the house.

As recent mortgage rate hikes add as much as $400 to a typical borrower's monthly payments, Dave Ramsey has some advice for potential homebuyers.

"If you can't afford the payment on a 15-year, fixed-rate mortgage, you can't afford the house," the radio host, financial personality, and best-selling author tweeted to his more than 900,000 followers.

Ramsey's suggestion implies that a potential buyer should not purchase a home if they cannot afford the monthly payments that would allow them to be debt-free in 15 years. Borrowers of a 15-year, fixed-rate mortgage typically have a higher interest rate that allows them to pay off debt in half the time it would take a borrower of a 30-year FRM — making their monthly payments higher but saving them thousands of dollars over the life of their loan.

—Dave Ramsey (@DaveRamsey) July 7, 2022

But while this type of mortgage financing aligns with Ramsey's philosophy on debt avoidance, Marc Moffitt, adjunct professor of real estate at the University of North Texas, told Insider, Ramsey's statement is "not true" and the 30-year FRM is a much better gauge of borrower affordability.

"If you can't afford a home on a 30-year mortgage, then you can't afford the home," Moffitt told Insider. "Mr. Ramsey has a preference for paying off debt quickly, and there is nothing wrong with that. But avoiding debt at all costs is not always a sound financial decision for everyone."

Realtor.com's data shows that with a national median listing price of $450,000, the average monthly payment for a 15-year FRM at a rate of 4.45% — with a 20% down payment — would equal $2,745. That means if a borrower wished to spend no more than the recommended 30% of their income on housing, their annual take-home pay would have to be about $110,000.

On the flip side, if a borrower applied the same logic to a 30-year fixed-rate mortgage, with a rate of 5.30%, the monthly payment of $2,000 requires about $80,000 in take-home annual earnings. As the median family income in the US sits at about $90,000, the 15-year FRM would not be affordable for the median household applying the 30% rule.

Because of this, Danielle Hale, the chief economist at Realtor.com, says it is not suited for everyone — and it has a lot to do with income levels.

"A mortgage term shorter than 30 years can make sense for older households who have owned a home before," Hale said. "However, younger first-time home buyers, who tend to be around age 30 will find that a longer-mortgage term enables them to buy a home, and therefore start building up equity for themselves instead of their landlords, much sooner because of the lower income needed to afford payments stretched over a longer term."

Moffitt says ultimately, a borrower's ability to afford a home will depend on their income and their long term financial objectives.

"If a buyer wants accelerated paydown of debt, then the 15-year mortgage is a good option, he said. "The issue of 'affordability' comes down to the debt-to-income ratio. The more a buyer makes, the more they can afford without straining them financially."